In This Article:
Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Cholamandalam Financial Holdings Ltd (BOM:504973) recorded a gross direct premium of INR 2,029 crore for the quarter, showcasing strong performance in the long-term non-motor business.
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The company achieved a growth rate of 1.5 times the industry growth on a one-by-one GDPI basis and 1.6 times on a full GDPI basis.
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Cholamandalam Financial Holdings Ltd expanded its distribution network by entering new OEM relationships and large financial partnerships, enhancing its market reach.
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The company added over 5.2 million customers during the year, indicating successful customer acquisition strategies.
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The investment corpus crossed the INR 18,000 crore mark, with a notable recovery of INR 54 crore from previously written-off investments, boosting financial stability.
Negative Points
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The combined ratio for the quarter was elevated at 109.3%, indicating higher operational costs relative to premiums earned.
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The company's expense of management stood at 33.14%, which, although lower than the previous year, still reflects significant operational expenses.
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The claims ratio for the year was 73.3%, only slightly lower than the previous year's 73.7%, suggesting persistent challenges in managing claims efficiently.
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The company faces uncertainty regarding the timing of potential motor third-party price revisions, which could impact future profitability.
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Despite efforts to reduce the combined ratio, it remains elevated, and achieving significant reductions may be challenging without external factors such as regulatory changes.
Q & A Highlights
Q: Can the current Return on Equity (ROE) levels of around 18% be sustained in the future, and what are the plans regarding the listing of the general insurance company? A: The ROE of 18% is sustainable, even without the one-time income effect. Regarding the listing, Cholamandalam MS was not part of the initial discussions with the regulator, which is focusing on larger players first. The board will consider this in due course. (Respondent: Unidentified_3)
Q: What is the outlook for the combined ratio and investment income, and how do they contribute to the ROE? A: The combined ratio is expected to remain elevated but may improve by 1% over the next 12 months. Investment income is anticipated to be robust, despite potential market volatility, contributing positively to profitability and ROE. (Respondent: Unidentified_3)